If you’re considering a reverse mortgage or already have one, understanding how it concludes is essential. In this article, we’ll explore the events and considerations involved when reaching the end of a reverse mortgage’s life.

Maturity Events and Defaults

A reverse mortgage typically concludes due to either a maturity event or a default. Let’s break it down:

1. Maturity Events: These occur when specific conditions are met. For instance:
   • • The last borrower or non-borrowing spouse permanently departs from the property.
     • Unfortunately, in some cases, the borrower passes away.
2. Defaults: Defaults arise from neglecting essential responsibilities:
   • • Property taxes and insurance payments.
     • Allowing the property to fall into disrepair.

Options at the End

Regardless of whether it’s a maturity event or default, the home can be sold to settle the loan. Here’s the silver lining: reverse mortgages are non-recourse loans. That means even if the loan balance exceeds the property’s sale value, neither the owner nor their heirs are liable for the deficit.

Navigating Communication and Decision-Making

When it comes to communication, clarity is key:

• Authorized Representatives: If the borrower designates someone to handle loan details, it streamlines communication.
• After the Borrower’s Passing: Only the executor or representative of the estate can directly engage with the loan servicer. The estate then has six months to decide:
  • Sell the property.
  • Refinance.
  • Give a deed in lieu of foreclosure.

The Importance of Effective Communication

Smooth transitions require effective communication between the estate and the servicer. Demonstrating intent and taking action toward loan repayment can facilitate extensions if needed. For expert guidance, consider reaching out to professionals like Renee Duval, who specialize in reverse mortgages, call or text:  603-345-5644 or renee@bookendlending.com

In summary, the conclusion of a reverse mortgage involves careful planning and proactive communication. Understanding your options and seeking guidance ensures a smoother journey for everyone involved.  Bookend Lending LLC can help guide you through the reverse mortgage process every step of the way!  Reach out today and find out how a HECM (Home equity conversion mortgage) or a Reverse mortgage may be an option for you.

 

 

This material is not provided by, nor was it approved by the Department of Housing & Urban Development (HUD) or by the Federal Housing Administration (FHA). It is not intended to be a substitute for legal, tax or financial advice. Consult with a qualified attorney, accountant or financial advisor for additional legal or tax advice. *There are some circumstances that will cause the loan to mature and the balance to become due and payable. The borrower(s) must continue to pay for property taxes and insurance and maintain the property to meet HUD standards or risk default. Credit is subject to age, minimum income guidelines, credit history, and property qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.